Formula To Calculate Total Interest Paid On A Loan In Excel Method 3 Computing Capital Payment for a Certain Interest Rate on a Loan Let s dive into the PPMT function in Excel The PPMT function helps you determine the principal payment for a given period based on periodic constant payments and a fixed interest rate Here s how it works Syntax rate The interest rate per period per Specifies the payment period must be in the range 1
Note In the formula B2 is the annual loan interest rate B2 12 will get the monthly rate B3 is the years of the loan B3 12 will get the total number of periods months during the loan B1 is the total amount of loan B4 is the first period you pay the bank while B5 is the last period you pay the bank Formula Breakdown We have used the PMT function which calculates the monthly or annual payment based on a loan with a constant interest rate and regular payment C7 denotes the monthly interest rate of 0 58 C8 denotes the total payment period in years which is 5 We have multiplied by 12 to calculate the monthly payment C5 denotes the present value which is 40 000
Formula To Calculate Total Interest Paid On A Loan In Excel
Formula To Calculate Total Interest Paid On A Loan In Excel
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Formula to Calculate an Interest Rate in Excel Maybe you have an existing loan and want to quickly see the annual interest rate you re paying As simple as calculating a payment with basic loan details you can do the same to determine the interest rate Get the loan term monthly payment and loan amount and enter them in your sheet PMT Monthly interest Total number of payments Loan amount Note The PMT function returns a negative number so a minus sign is put in front of the Loan amount to make the result a positive number Press Enter Step 4 Calculate the total interest Select the cell where the result is to be displayed
Where Rate required the constant interest rate per period You can supply it as a percentage or decimal number For example if you make annual payments on a loan with an annual interest rate of 6 percent use 6 or 0 06 for rate If you make weekly monthly or quarterly payments divide the annual rate by the number of payment periods per year as shown in this example Calculating total interest paid on a loan is crucial for financial planning and decision making Using Excel to calculate total interest paid involves inputting loan data using the PMT function and performing calculations Understanding the significance of total payments and total interest paid is essential for managing personal finances
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Using Excel to Calculate the Payment and Total Interest on a Loan Figure 1 below illustrates all of the different variables that are needed to calculate the payment Here is a listing of the information titles in each cell in column A A2 Annual Interest Rate A3 Period Rate rate This is the Annual Interest Rate divided by the Payments Below are some practice scenarios for you to apply the loan formula and calculate the total interest paid on a loan Scenario 1 You take out a 10 000 loan with an annual interest rate of 5 and a 5 year term Use the loan formula to calculate the total interest paid over the life of the loan
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